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Colombian Crypto Market Advances, but Users Demand Greater Security

Published 05/24/2022, 10:12 AM
Updated 05/24/2022, 10:30 AM
Colombian Crypto Market Advances, but Users Demand Greater Security

  • A little more than a third of Colombians would be willing to use cryptocurrencies if guaranteed a higher level of security against theft and scams.
  • The growth of the cryptocurrency market in Colombia could be linked to its use in drug trafficking by Mexican cartels.
  • About 70% of those surveyed would be willing to pay for online purchases using cryptocurrencies.

As the cryptocurrency market in Colombia continues to grow, along with interest in the use of digital currencies as a means of payment, an estimated two-thirds of Colombians are demanding greater security for their investments.

The data was revealed in a recent study by European cryptocurrency platform CoinsPaid, which showed that 65.4% of people surveyed were willing to adopt digital money in their business activities.

However, if the government and companies in the sector were to provide a higher level of security to the transactions made by users, particularly in preventing theft and fraud, that number could increase.

Colombia, ranks among the top three Latin American countries in terms of the use of cryptocurrencies, alongside Venezuela and Argentina, according to the Chainalysis‘ 2021 ‘Global Cryptocurrency Adoption Index‘.

"Up to 35.8% of the participants in the survey would be willing to buy with cryptocurrencies if the country's scenario guaranteed greater confidence," the report revealed, as quoted by newspaper La República. “Respondents prioritize the aspect of regulation and information about promotions, discounts and exclusive services that businesses that accept cryptocurrencies could offer,” the study added. This data only confirms the growth of the cryptocurrency market in the South American country, which ranks 11th among countries using digital currencies the most globally.

Currently, Colombia is also the country with the largest number of Bitcoin ATMs in Latin America. The rise of the informal market for cryptocurrencies in the country is largely due to the remittances sent by Venezuelan migrants to their families.

Drug Trafficking Rears Its Head

A poorly-kept secret is that on the border between Colombia and Venezuela, large volumes of cryptocurrencies are being used by Mexican drug cartels to pay for cocaine shipments from Colombia. This means that a not insignificant portion of the cryptocurrencies circulating in the Colombian market are presumed to come from drug trafficking.

For decades, Venezuela, Central America, and the Caribbean have been the route used by drug cartels to smuggle drugs from Colombia, Peru, and Bolivia to the United States and Europe, as described in a report by the United Nations Office on Drugs and Crime (UNODC).

One of the main centers of drug trafficking operations is located in the Colombian border city of Cucuta, Arauca. Informed sources have revealed that Mexican cartels send “executives” from time to time to exchange cocaine for cryptocurrencies.

“The Sinaloa Cartel and the Gulf Cartel are the buyers of the cocaine grown in Colombia, Peru and the Bolivian jungle. It reaches Ecuador and Venezuela by land. From there, the cartels send the shipments on planes to Mexico, Honduras, Nicaragua or Guatemala”, affirms the professor of National Security at the National Autonomous University of Mexico (UNAM), Raúl Benítez.

The Growing Trend of Crypto Adoption

"Purchases in cryptocurrencies like Bitcoin obviously increase when their own value is stable, but the trend is clear," said Rafael Brunacci, business development manager for CoinsPaid in Latin America. Brunacci further projects that “between December 2020 and January 2022, cryptocurrency transactions will reach U.S. $1.8 trillion, which is a huge amount for retail activity, and illustrates the importance of businesses accepting digital currency payments.” According to the results of the study, almost two thirds of Colombians would also be willing to use cryptocurrencies to make various online purchases, and 31.2% would be open to buying electronic equipment such as computers and smartphones using digital assets.

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